Could CWH float next year… with a market value of $5bn?


Chemist Warehouse may not have abandoned plans for an initial public offering in 2021, hints mainstream media

The Australian is again speculating on the future of Chemist Warehouse, with Dataroom editor Bridget Carter suggesting that appearances at conferences could be a sign an IPO is still on the way soon.

Financial editors in mainstream media have been examining the potential for Chemist Warehouse to float for several years now.

While in March 2018 co-founder Jack Gance said the discount giant had no interest in an IPO, by August 2019 a date of late 2020 was being suggested for such a gambit.

In August Ms Carter said that it was likely that the group’s owners would want to keep a financial interest in it.

“Chemist Warehouse’s plans for an initial public offering are understood to have been pushed back to next year,” writes Ms Carter.

“Last month, suggestions surfaced that a suitor could be running the ruler over the business, yet many now expect a float of the pharmacy chain to be the most likely option, with the owners thought to be keen to retain a stake.”

The likely suitor had been Wesfarmers, she wrote earlier this year.

Now, she notes that Chemist Warehouse representatives will appear as part of a panel at the upcoming UBS Australasia Investment Conference, as well as the Morgan Stanley Asia Pacific Summit later in the month.

She hints that this has prompted some observers “to take the view that it has not given up on plans for an initial public offering next year”.

“Chemist Warehouse has been considered a likely float candidate for at least two years but has not yet progressed with a plan for a potential listing,” Ms Carter wrote in Dataroom this week.

“Chemist Warehouse has undergone a restructure in preparation for being a listed company, but to prevent a major capital gains tax payment it had to hold the business for more than 12 months.

“For this reason, a deal was always thought to happen by the fourth quarter at the earliest as it moved to avoid capital gains tax payments.”

The discounter’s market value is expected to be in the vicinity of $5 billion, she writes.

“Macquarie Capital held investor education sessions about the business in 2017 so will be well placed to win an advisory role should the chemist chain opt for a listing.”

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